Simpson v. Cavalry SPV I LLC et al

Filing 22

CERTIFICATION ORDER, pursuant to Rule 6-8 of the Rules of the Supreme Court of the State of Arkansas, this Court certifies to the Supreme Court of Arkansas a question of law that may be determinative of this case. The Clerk is hereby directed to forward this Order to the Supreme Court of Arkansas under his official seal. Signed by Judge J. Leon Holmes on 1/7/2014. (ks)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
NORTHERN DIVISION
PATTY E. SIMPSON

PLAINTIFF

v.

NO. 1:13CV00093 JLH

CAVALRY SPV I, LLC, as Assignee of
HSBC Bank Nevada, N.A./Orchard Bank

DEFENDANT

CERTIFICATION ORDER
Pursuant to Rule 6-8 of the Rules of the Supreme Court of the State of Arkansas, this Court
certifies to the Supreme Court of Arkansas a question of law that may be determinative of this case
and as to which it appears there is no controlling precedent in the decisions of the Supreme Court of
Arkansas.
I. QUESTIONS OF LAW TO BE ANSWERED
1.

Whether an entity that purchases delinquent accounts and then retains a licensed

Arkansas lawyer to collect on the delinquent accounts and file lawsuits on its behalf in Arkansas is
“attempt[ing] to collect,” thus meeting the definition of “collection agency,” pursuant to Arkansas
Code Annotated § 17-24-101?
2.

Whether an entity that purchases delinquent accounts and then retains a licensed

Arkansas lawyer to collect on the delinquent accounts and file lawsuits on its behalf in Arkansas is
“attempt[ing] to collect” and, thus, is required to be licensed by the Arkansas State Board of
Collection Agencies pursuant to Arkansas Code Annotated §17-24-301(4)?
II. FACTS RELEVANT TO THE QUESTIONS
Patty E. Simpson obtained a credit card from HSBC Bank Nevada, N.A., on July 9, 2005.
That account became delinquent and was charged off on October 30, 2010. HSBC Bank Nevada,

N.A., assigned Simpson’s account to Cavalry SPV I, LLC, on November 24, 2010. During the time
period encompassing the facts at issue in this lawsuit, Cavalry was not licensed in the State of
Arkansas as a debt collector. Cavalry retained the McHughes Law Firm in Arkansas to represent it.
On behalf of Cavalry, the McHughes Law Firm commenced an action in the District Court of Jackson
County, Arkansas, on December 8, 2010, seeking to collect the debt, which was in the principal
amount of $1,078.51. On March 25, 2013, a default judgment was entered against Simpson in that
action. On August 5, 2013, garnishment was issued for Simpson’s account at Iberia Bank. On
September 16, 2013, Simpson commenced this action in the Circuit Court of Jackson County,
Arkansas. She originally brought this action against Cavalry and against the McHughes Law Firm.1
She alleged that the actions of Cavalry violated the Arkansas Fair Debt Collection Practices Act, as
well as the Federal Fair Debt Collection Practices Act. Underlying both her state and federal claims
is her contention that Cavalry was required to be licensed by the Arkansas State Board of Collection
Agencies.2
On October 22, 2013, Cavalry removed the action to the United States District Court for the
Eastern District of Arkansas. On October 29, 2013, Cavalry moved for summary judgment asserting
that Ark. Code Ann. § 17-24-101 et seq. does not require it to be licensed because it does not attempt
to collect delinquent accounts or bills inasmuch as it hired a licensed Arkansas lawyer to collect on
delinquent accounts and to file lawsuits on its behalf. Simpson contends that Cavalry is a collection

1

Simpson subsequently agreed to dismiss the McHughes Law Firm with prejudice, so the only
remaining defendant is Cavalry.
2

Her federal claim is based on 15 U.S.C. § 1692e(5), which makes it illegal to threaten to take
an action that cannot legally be taken. Because Cavalry is not licensed as a debt collector by the
Arkansas State Board of Collection Agencies, Simpson contends that commencing the debt collection
action against her violated this federal statute.
2

agency as defined in Ark. Code Ann. § 17-24-101 and must be licensed pursuant to Ark. Code Ann.
§ 17-24-301 because it purchases and attempts to collect delinquent accounts. This issue is
potentially dispositive of both the Arkansas claims and the federal claims brought by Simpson against
Cavalry.
III. REFORMULATION OF THE QUESTIONS
The United States District Court hereby acknowledges that the Arkansas Supreme Court,
acting as the receiving court, may reformulate the questions presented.
IV. COUNSEL OF RECORD AND PARTIES
The attorneys of record in the case pending before this Court are as follows:
Attorneys for Plaintiff Patty E. Simpson:
J. R. Andrews
Cook Law Firm
8114 Cantrell Road, Suite 100
Little Rock, AR 72227
[phone]

Harold F. Cook
Cook Law Firm
8114 Cantrell Road, Suite 100
Little Rock, AR 72227
[phone]

Attorneys for Defendant Cavalry SPV I, LLC:
Megan Stephens
Burr & Forman, LLP
420 N. 20th St. Suite 3400
Birmingham, AL 35203
[phone]

Zachary D. Miller
Burr & Forman, LLP
420 N. 20th St. Suite 3400
Birmingham, AL 35203
[phone]

R. Frank Springfield
Burr & Forman, LLP
420 N. 20th St. Suite 3400
Birmingham, AL 35203
[phone]

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V.
The Clerk of the Court is hereby directed to forward this Certification Order to the Supreme
Court of Arkansas under his official seal.
IT IS SO ORDERED this 7th day of January, 2014.

J. LEON HOLMES
UNITED STATES DISTRICT JUDGE

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